- National Spot Exchange Ltd halts trading in e-series contractsNational Spot Exchange Ltd investors' loss: Stock brokers, portfolio managers under scannerLoopholes exploited to hardsell NSEL productsFMC gets more teeth to ensure crisis-hit National Spot Exchange settles Rs 5,600 cr dues
Just five buyers accounted for 70% of the outstanding of Rs 5,599 crore at the National Spot Exchange (NSEL) after the bourse suspended the trading of one-day forward contracts on July 31, exchange data show. However, at R4,196 crore, the value of collateral in the form of commodity stocks at the exchange-designated warehouses of these members exceeded the dues of R3,920 crore.
However, auctioning the stocks to settle contracts could be a tough option for the exchange. A source close to the development said the auction process, which can be done only after members defaulted on payments, will also take time to pan out due to fears of litigation.
“More important, the apprehension is that auctioning stocks may fetch less returns than the actual stock value (NSEL said it had stocks worth R6,200 crore) because interested buyers may quote lower prices for the commodities to take undue advantage of the crisis. This may result in distress sales by the exchange,” the source said. This is why the exchange is trying its best to persuade members to clear the dues on time by negotiating on different options, he added. NSEL said on Sunday eight of its members were willing to pay R2,181 crore, or 39% of total outstanding positions, on or before scheduled dates. It also added 13 other members, with a combined outstanding of R3,107 crore, had offered to pay 5% of their total dues every week, while negotiations were going on with three processors who owed R311 crore.
After a meeting of officials with the Forward Markets Commission (FMC) and NSEL, along with members and processors, on Sunday, it was decided that those who offered to pay the dues in a staggered manner would have to offer the interest. FMC chairman Ramesh Abhishek said the exchange was hopeful that 95% of the total outstanding would be settled by the first week of September.
The move came in the wake of concerns in financial and commodities markets that NSEL might not have adequate stocks to settle outstanding contracts, although the exchange stressed it had stocks worth R6,200 crore to deal with